In a 100-page monograph titled India's Globalization: Evaluating the Economic Consequences, published last month by the East-West Centre, Washington DC, Professor Nayar asserts that globalisation has helped the Indian economy record a 6 per cent to 7 per cent growth rate, and that it could increase with further opening up of markets.
The fact that some Southeast Asian countries have grown faster than India because of globalisation is because they opened up their economies more than India has, he says.
In an interview with Rediff India Abroad Senior Editor Ajit Jain in Canada, Professor Nayar also contends that globalisation in India started in 1975, and not 1991, as is widely believed.
In your monograph, you conclude that globalisation helps growth...
No doubt globalisation has helped the Indian economy. There is a proposition amongst many critiques that globalisation leads to the disintegration of the economy, destabilisation of the economy, etc. It also has consequences on culture, etc. I am dealing only with the economic consequences of globalisation as otherwise you need a much bigger study.
I look at the consequences of globalisation which is based on literature in India. There are some influential proponents against globalisation who argue that globalisation leads to economic stagnation, it leads to destabilisation of the economy, economic instability, economic impoverishment, etc.
I don't see any evidence that globalisation has these consequences. To me the evidence doesn't justify the proposition that these critiques are putting forward. The evidence refutes the proposition.
Do these criticisms come from Indian economists?
Both Indians as well as others. There are critiques of globalisation all around the world. In countries in Southeast Asia and East Asia there is a positive position on globalisation, that it helps growth and it helps in every areas of life, helps industrialisation. But in India it is a contested proposition. They say it is not true in the case of India.
Prabhat Patnaik is a very, very influential Marxist economist in India. He will soon take over as chairman of the Planning Board of Kerala. He has very clearly maintained this position on globalisation.
In addition, the critiques also say globalisation leads to erosion of democracy, destabilisation of the country, but I haven't dealt with those propositions because in my monogram, in my research work, I am confining myself with the consequences of globalisation on the economy.
You say the Indian economy is now growing at 5 per cent.
It is growing at 6 to 7 per cent.
The question is when did globalisation began in India. I say it began in 1975 when Indira Gandhi was prime minister. There are differing opinions on that.
I say globalisation began in 1975 and it continued in an incremental manner, but it was not a radical form. Many people say globalisation actually started in 1991.
Can this growth rate of 7 percent be sustained?
You can sustain this 7 percent growth, and it could go even higher provided the right policies are pursued.
India's growth rate is 7 percent while China is growing at 10 per cent. Why this difference?
For that you have to adopt China's policies. The way China can enforce its policies India cannot because India is a democratic country.
India has limited globalisation. It has opened itself very much but not as much as the Southeast Asian countries have done. High tariffs is one impediment in the growth of the Indian economy.
China is much more open to foreign investment and India is not. Wal-Mart is so big in China, but it cannot enter India.
What would you suggest?
India should open up fully. But I am not a reckless person. I don't want that this should be done overnight. You should plan to do it gradually so that your industry can adjust, and this opening up shouldn't be at the cost of the extinction of Indian industries.
In any case for the Indian government there are the political consequences of bringing down tariffs further, opening up the economy fully for foreign investment, etc.
There are still so many restrictions on businesses. I am not suggesting that the economy be opened overnight as that could overwhelm the country.
But you fully endorse globalisation.
Yes, and I don't make any bones about it. Some critiques of globalisation don't provide evidence against our position in favor of globalisation.
In my monograph I compare the (Indian) economy during pre-globalisation and post-globalisation. That is a very essential part of my monograph because if you just take something on its own you prove nothing.
There is still poverty and huge social and economic disparity in India...
Yes, people in India are still poor. Globalisation is not like a magic wand, that you wave it and poverty will disappear. You have to allow the process to proceed over a period of time.
Sadly, the Indian political system will always produce roadblocks. One has to expect that as it is part of the Indian political structure now. In the pre-globalisation period economic growth was 3.5 percent and that, to me, is stagnation.
You say India's globalisation began in 1975 when Indira Gandhi was prime minister.
Yes, but globalisation did not come in full swing until 1991. Even then it has some limitations compared to other Asian countries. You can see that 90 per cent of industry is still under control of Indian businesses and multinationals even now are not too big in India.
The public sector is still huge in the country and it is very inefficient.
Businesspeople say Indian labour laws should be reformed as they obstruct growth.
The central government has a reform agenda. The contents of this agenda are fairly wellknown and those being lowering of tariffs, investments in agriculture, giving more leg room to businesses rather than imposing restrictions.
They should implement this reform agenda fully. The government is now making more reservations for scheduled castes and scheduled tribes. That, I believe, will ruin Indian industries.
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